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One company symbolizes everything sickening about the opioid crisis

Jonathan Roper (2nd L), a former Insys Therapeutics Inc district sales manager, and Fernando Serrano (C), a former sales representative at the company walk with Serrano's lawyer, Jude Cardenas (R), out of federal court after they pleaded not guilty to engaged in a scheme to pay doctors kickbacks to prescribe a fentanyl-based drug the company sells, in Manhattan, New York, U.S., August 17, 2016.

source

Reuters

Insys Therapeutics makes a spray version of the
powerful opiate fentanyl, which is many times stronger than
morphine.The company pays speakers fees to doctors, some of whom
have had their licenses suspended or face jail time for
overprescribing the drug. In Connecticut, a nurse admitted to
taking kickbacks in exchange for prescribing the drug.Insys faces federal inquiries and questions from
lawmakers about its practices, including alleged promotion of
the drug for off-label uses.

You've probably never heard of Insys Therapeutics. You've also
probably never heard of its only drug, Subsys, a spray version of
the powerful opiate fentanyl.

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But the story of Insys and a mounting list of alleged misdeeds
with Subsys will teach you a lot about the role of corporate
greed in the opioid crisis.

In trying to understand the epidemic, we've heard many stories of
devastated communities and families trying to cope. We've heard
of addicted patients and overburdened treatment facilities.

But it has been harder to understand how these drugs spread so
quickly, how suddenly it seemed like pain medication was
everywhere.

Insys figured out one devastatingly effective and potentially
illegal way to get their product out there.

It deployed a strategy of paying some doctors "speakers fees,"
while allegedly using inexperienced salespeople to bully others
into using the drug. It faces inquiries into whether it promoted
off-label use of a painkiller intended for cancer patients that
is many times stronger than morphine. For some of this, Insys -
which is publicly traded with a market cap of about $800 million
- has already gotten in trouble with federal law enforcement.

Other aspects of its business practices remain under
investigation or have yet to be proved in a court of law. We're
bound to learn a lot more as congressional inquiries and
shareholder lawsuits proceed, but there are some things we do
know already. One of the most alarming is about some of the
doctors prescribing the drug.

Of the 15 top prescribers of the Subsys in 2014, nine have faced
or are facing serious legal allegations related to their medical
practice. Most of these issues are directly related to their
distribution of Subsys. At least two could spend decades in jail.

All of them have received tens of thousands of dollars from
Arizona-based Insys. The company did not respond to Business
Insider's repeated requests for comment for this story.

Known knowns

It's not hard to find out who the top prescribers of Subsys are.
All of that information is available through the Centers for
Medicare and Medicaid Services and has been compiled into an
easy-to-search
website by ProPublica. The year 2014 is the most recent for
which data is available.

source

Skye Gould/Business Insider

ProPublica did us all the favor
of making it easy to see who is paying these doctors, on another
site called Dollars for
Docs. That data is available from 2013 to 2015. Put it
together and you can learn quite a lot.

For example, you can learn that Dr. Gavin Awerbuch, the top
prescriber of Subsys, accepted $89,975 from the company in 2013
and 2014. In 2015, the payments stopped. That may be because, by
2016, the
avid baseball-card and ancient-coin collector had pleaded
guilty of defrauding Medicare of $1.9 million and Blue Cross Blue
Shield $1.2 million while overprescribing Subsys to patients.

The doctors who take the fifth and eighth spots on the list, John
Couch and Xiulu Ruan, were in business together. Earlier this
year, they were found
guilty of running a pill mill out of their Alabama clinics.

Not only were Couch and Ruan overprescribing Subsys and other
powerful opioids to people who didn't need them, but they were
also ripping off health-insurance companies by ordering patients
to take unnecessary and expensive urine tests. They also would
claim that doctors had seen patients when they had actually been
seen by nurse practitioners so that they could bill a higher
rate.

Each faces 20 years in prison and will pay the government $5
million in cash and give up property they bought with the $40
million they made. Ruan also forfeited 20 luxury sports cars,
including two Ferraris and two Lamborghinis,
according to The Wall Street Journal.

You can't see any financial information for either Christopher
Clough or Heather Alfonso, prescribers 12 and 13 on the list.
That's because they're not doctors.

Clough was a physician's assistant in New Hampshire and lost his
license after being arrested and charged with one count of
conspiracy and seven counts of receipt of kickbacks in relation
to a federal healthcare program - all related to his alleged
overprescription of Subsys. According to his indictment, Insys
paid him
$41,000 to talk about Subsys at events in 2013 and 2014.

Insys paid New Hampshire
$2.9 million to settle allegations of aggressive marketing of
Subsys, related to Clough's case.

Unknown knowns

What's harder to figure out than what these medical professionals
are being paid is how or why they were introduced to Insys'
speakers' program in the first place. That's where all these
payments are coming from.

Just 1,600 doctors in the US are responsible for 90% of
fentanyl-based prescriptions, and Insys has a laser focus on
them. Its efforts are also focused on making more physicians join
their ranks according to the company's most recent annual report.

"Our sales and marketing efforts have primarily targeted
approximately 100% of these top 1,600 prescribing physicians with
a focus on the highest prescribers," it says. "We believe that
key factors for driving future Subsys growth include increasing
the number of prescriptions written by those physicians who
currently prescribe Subsys, increasing the number of TIRF REMS
enrolled physicians and oncologists who prescribe Subsys, and
allowing sufficient time for physicians and patients to identify
their effective Subsys dose among our broad spectrum of dosage
strengths."

TIRF
REMS is the FDA program that medical professionals have to
enroll in before they prescribe fentanyl.

There are a couple of steps to this:

Identifying high prescribers or likely high prescribers.
Get those doctors interested in the drug. For that, Insys
needs sales reps.

In 2015, he reported that Sunrise Lee, Insys' former central and
later western sales region head, had no pharmaceutical sales
experience before joining the company. Her previous employer was
Rachel's, a West Palm Beach strip club where she was
a dancer.

"Doctors really enjoyed spending time with her and found Sunrise
to be a great listener," Insys' national sales chief Alex
Burlakoff told
SIRF.

"She's more of a 'closer,'" he continued. "Often the initial
contact [with a doctor] was made by another salesperson."

caption

Preet Bharara in 2014.

source

Thomson Reuters

We know that former US Attorney for the Southern District Preet
Bharara arrested two sales reps, Jonathan Roper and Fernando
Serrano (pictured at the top of the post), from "Pharma
Company-1" in June 2016.

They were charged with "violating the Anti-Kickback Statute in
connection with their participation in a scheme to pay doctors
thousands of dollars to participate in sham educational programs
in order to induce the doctors to prescribe millions of dollars'
worth of a fentanyl-based sublingual spray manufactured by Pharma
Company-1."

Subsys is the leading fentanyl spray, and the company has
acknowledged in public documents that it has received government
agency requests, including subpoenas, from the Southern District
among other districts.

"Not only did the defendants in this case allegedly bully sales
reps into pushing this highly addictive drug, they paid doctors
to prescribe it to patients," FBI Assistant Director Diego
Rodriguez said. "The more prescriptions written, the more money
the doctors made."

We'll find out more about that in court, hopefully.

caption

Sen. Claire McCaskill, the Missouri Democrat.

source

Aaron P. Bernstein/Getty Images

There's more. Sen. Claire McCaskill, the Missouri Democrat, did
include the company in her recently launched investigation into
the marketing programs of opioid manufacturers. Insys, along with
Purdue, Johnson & Johnson, Mylan, and Depomed will have to
produce the following.

Documents showing any internal estimates of the risk of
misuse, abuse, addiction, overdose, diversion, or death arising
from the use of any opioid product or any estimates of these
risks produced by third-party contractors or vendors.
Any reports generated within the past five years summarizing
or concerning compliance audits of sales and marketing policies.
Marketing and business plans, including plans for
direct-to-consumer and physician marketing, developed in the past
five years.
Quotas for sales representatives dedicated to opioid products
concerning the recruitment of physicians for speakers programs
during the last five years.
Contributions to a variety of third-party advocacy
organizations:
Any reports issued to government agencies during the last
five years in accordance with corporate integrity agreements or
other settlement agreements.

That's quite a range of information and may include Insys'
reimbursement services, a unit that started a little before
Insys' stock started shooting up in 2013. A federal court in
Boston has charged the former head of that unit, Elizabeth
Gurrieri, with instructing her unit to call insurance companies
pretending to be doctors and give them something called
"the spiel."

The FBI alleges that "the spiel" was essentially Insys employees
falsely claiming that the patients had cancer, which would get
Insys around the prior authorization requirement for Subsys.

Unknown unknowns

Now, what's totally unclear is how the company will survive all
this drama. In December, the former CEO, Michael Babich,
was arrested along with five other executives in connection
with a kickback scheme and the bribing of medical professionals
to prescribe Subsys.

Babich had stepped down in 2015. He was succeeded
recently by
Saeed Motahari. Motahari comes from Purdue Pharmaceuticals,
the original manufacturer of OxyContin, so this should comfort
nobody.

source

Markets Insider

What's more, Insys is not only being attacked by law enforcement
but also by its own shareholders.

"In general, the plaintiffs allege that the defendants violated
the antifraud provisions of the federal securities laws by making
materially false and misleading statements regarding our business
and financial results during the class period, thereby
artificially inflating the price of our securities," the company
said in public filings.

There are two cases of this kind filed against the company in the
Southern District of New York alone. Another shareholder case
against the company has been filed in the US District Court for
Arizona.

There are a number of agencies looking into whether or not the
company promoted Subsys for off-label uses. Legally, doctors can
prescribe the medication for whatever they deem necessary, but
the company can't tell them to do so in any of its marketing
materials. The company has received subpoenas from HHS, the
Office of Inspector General, the US District Attorney's Office
for the District of Massachusetts, and other attorneys general
regarding this matter.

Here's what Insys has had to say about the legal troubles:

"[W]e believe a loss from an unfavorable outcome of these
governmental proceedings is reasonably possible and an estimate
of the amount or range of loss from an unfavorable outcome is not
determinable at these stages. We believe we have meritorious
legal positions and will continue to represent our interests
vigorously in these matters.

"However, responding to government investigations has and could
continue to burden us with substantial legal costs in connection
with defending any claims raised. Any potential resulting fines,
restitution, damages and penalties, settlement payments, pleas or
exclusion from federal health care programs or other
administrative actions, as well as any related actions brought by
shareholders or other third parties, could have a material
adverse effect on our financial position, results of operations
or cash flows. Additionally, these matters could also have a
negative impact on our reputation and divert the attention of our
management from operating our business."

Subsys-prescribing doctors in some of these states have received
subpoenas, too, according to company filings. It's no wonder then
that Insys experienced a 32% decline in Subsys prescriptions from
the fourth quarter of 2016 to the first quarter of 2017.